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Going back to work - tax implications
So, with the little one being in school full-time I am looking at the tax implications of me going back to work on a part-time basis. Bearing in mind that it likely would be a entry level job to start @ $11.85 p/h, given the large career gap I have (and no Canadian experience or formal education). I’m looking at the spousal amount tax credit and- unless I’m reading it all wrong - then they reduce the amount of tax credit my other half receives by the amount I earn dollar for dollar up to the maximum of $11,800. I would need to drive about 30km round trip to get to the city and work, and either keep it to 6 hours a day, or pay for before and after care (which would cost almost as much as what I’m earning - and obviously I’m not going to get any subsidy for this because husband is earning too much) If I factor in school holidays and in-service days we are talking about 6hrs a day for 42 weeks. So a gross yearly income of $14,931 less $11,800 = $ 3,131 I’m adding to the household income less any deductions. I am now going to be earning less than $2.60 an hour (less travel expenses). :huh: |
Re: Going back to work - tax implications
What is the question?
Don't forget, the amount you pay in childcare will also reduce your taxable income. I don't understand why you believe your income will reduce by the $11,800. All that will happen is that the tax you don't pay at your marginal rate, will be offset by the tax your OH would have paid on that $11,800 at his marginal rate. Are you hoping that your income will improve over time? Do you wish to work for reasons other than income? |
Re: Going back to work - tax implications
Originally Posted by Almost Canadian
(Post 12725748)
What is the question?
Don't forget, the amount you pay in childcare will also reduce your taxable income. I don't understand why you believe your income will reduce by the $11,800. All that will happen is that the tax you don't pay at your marginal rate, will be offset by the tax your OH would have paid on that $11,800 at his marginal rate. Are you hoping that your income will improve over time? Do you wish to work for reasons other than income? Therefore the amount I earn up to $11,800 is basically just added on to his tax bill. It states ‘the amount you receive for the spousal amount is the difference between your spouses income and $11,800’ Only looking to earn a bit of extra cash, not ever been career driven. |
Re: Going back to work - tax implications
Originally Posted by AlliF
(Post 12725761)
So I am reading it wrong then? It says it is a tax credit (not a deduction) that he receives - does that not mean that he owes $11,800 less tax when I have no income? Therefore the amount I earn up to $11,800 is basically just added on to his tax bill. It states ‘the amount you receive for the spousal amount is the difference between your spouses income and $11,800’ Only looking to earn a bit of extra cash, not ever been career driven. Let's say he pays tax at a rate of 50%. The $11,800 that you don't use is used to reduce his taxable income by the same amount and he will save $5,900, if the $11,800 is applied to his income. If you earn income, you will use the $11,800 to reduce the tax that you would have to pay. If your marginal rate is 15% (I have no idea what it is), you would save $1,770 in tax, which is $4,130 less than the tax he would have paid. However, you have also earned $14,931 so, all other things being equal, you will be $10,801 better off. Whether it is worth it for you (financially and emotionally) is entirely a matter for you. |
Re: Going back to work - tax implications
Ahh, I see, I thought that was how a tax deduction worked. And this is why I leave all the accounting to somebody else. ;) |
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